Victoria’s Secret to test out-of-mall ‘store of the future’ this fall

Victoria’s Secret is getting a makeover.

And part of the lingerie maker’s strategy – as it prepares to exit L Brands into a separate public entity known as Victoria’s Secret & Co. – is to move away from traditional malls.

In a virtual presentation to investors on Monday, Victoria’s Secret & Co. CEO Martin Waters explained that the retailer plans to test three locations it calls “the store of the future” later this fall.

One of those new stores will be located in an off-center mall, Waters said. This will be followed by 10 more test sites in 2022, the majority of which will be outside the mall.

“We can take advantage of the traffic that is in these clearing locations and out of the mall,” Waters said during the presentation. “It’s a flexible environment in which we can move goods – depending on what sells better and what sells less. “

Future Victoria’s Secret stores will offer improved customer service, have a “modern and feminine” feel, as well as a refined staff model, the company said. The goal of these locations is to dramatically reduce costs, he added.

In the meantime, Victoria’s Secret is in the process of refreshing existing locations to make them lighter and, hopefully, more appealing to potential customers. The black fixtures are removed and replaced by white tones and light wood. As it seeks to ditch its sexist and demeaning image, the retailer has brought in supermodels in extended sizes to showcase its bras and underwear.

“We were marketing the brand in a way that, frankly, was deaf and was starting to become, if not already, culturally irrelevant,” Waters said.

For years, Victoria’s Secret has been reducing its store portfolio, especially in North America, to focus its investments on the most profitable stores. The initiative has become necessary as more and more consumers reorient their spending online. The company had 1,143 sites in the region in 2018. Today, it has 867.

As it seeks to expand its non-mall locations, Victoria’s Secret will likely keep its stores open in the best performing malls. Today, approximately 26% of Victoria’s Secret locations in North America are in A-rated malls, which generate the most sales per square foot. Thirty-seven percent are in B malls, 13% in C-rated malls and 24% in other types of properties, the company said.

“There is downward pressure from about 150 vulnerable malls,” Waters said of the malls landscape in the United States. “And we predict that these malls will continue to be vulnerable for about three years.”

Victoria’s Secret is certainly not the first retailer to employ a strategy of moving away from closed malls. Apparel maker Gap Inc. recently said 80% of its sales come from outside the mall: either online, in malls, or from street-level locations. The Macy’s department store chain is also opening a handful of smaller, non-mall locations.

L Brands shares fell 4% on Monday afternoon, amid a sell-off. The title is up 87% since the start of the year. L Brands has a market capitalization of approximately $ 19.2 billion.